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They are, but so are digits in fiat bank accounts. Really they are just another fiat payment routing clearinghouse. They work better than SWIFT but slower and irreversible.
I think they are mainly there and continuing to do well due to being an easy pathway between fiat units and satoshis, riding on Bitcoin's value, which more or less proportionally tracks with the amount they have circulating, give or take.
If nothing else, it brings people into two more clicks to stacking sats. Of course they are irrelevant under a bitcoin standard since nobody's using that trash anymore but for the time being, it's got its benefits and it impedes our enemies more than it does to our cause. They are the gateway drug from forex to bitcoin.
LSPs by definition cannot centralize the lightning network. Centralization is a matter of control. LSPs do not control user funds, the only thing an LSP can do is choose to serve you or not. If they choose not to, just don't use that LSP.
Do not confuse popularity with centralization. They are not the same. A popular service that has no control of your funds or your actions is not a central point of failure even if most people use it. If the most popular LSP in the world begins censoring certain transactions, even that doesn't make it centralized. It is just a signal on the network that there is demand for a new service provider, an uncensored channel to whatever destination the "bad" LSP tried to censor. Anyone can create that connection point easily, so LSPs effectively have no power.
This is because the sender is unaware of your channel balances and how much to split up their payments properly, since MPP is something the sender does.
I'm a bit unsure why the sender wouldn't eventually find the right split, but perhaps there's a time out issue here. And I'm not sure why it's not attempting to create a new channel instead of trying to fit down the existing ones. Perhaps I misread something or I'm not familar with how you are testing this.
The fight is pointless.
Why would anyone trust a centralized coordinator anyway?
Just use Joinmarket